February 24, 2022

Sanctions Package Targets 80 Percent of All Banking Assets in Russia

James Treanor Commentary by James Treanor

In a speech, President Joseph R. Biden outlined the latest package of sanctions against the largest Russian banks, among other targets. The White House issued a fact sheet on the details of today's actions, and OFAC provided specifics on targets in both Russia and Belarus. OFAC stated these sanctions go after "the core infrastructure of the Russian financial system" and will impact "nearly 80 percent" of banking assets in Russia.

The White House described today's actions as follows:

  • "Severing the connection to the U.S. financial system for Russia’s largest financial institution, Sberbank, including 25 subsidiaries, by imposing correspondent and payable-through account sanctions.
  • "Full blocking sanctions on Russia’s second largest financial institution, VTB Bank (VTB), including 20 subsidiaries.
  • "Full blocking sanctions on three other major Russian financial institutions: Bank Otkritie, Sovcombank OJSC, and Novikombank- and 34 subsidiaries.
  • "New debt and equity restrictions on thirteen of the most critical major Russian enterprises and entities.
  • "Additional full blocking sanctions on Russian elites and their family members: Sergei Ivanov (and his son, Sergei), Andrey Patrushev (and his son Nikolai), Igor Sechin (and his son Ivan), Andrey Puchkov, Yuriy Solviev (and two real estate companies he owns), Galina Ulyutina, and Alexander Vedyakhin.
  • "Costs on Belarus for supporting a further invasion of Ukraine by sanctioning 24 Belarusian individuals and entities, including targeting Belarus’ military and financial capabilities by sanctioning two significant Belarusian state-owned banks, nine defense firms, and seven regime-connected official and elites. We call on Belarus to withdraw its support for Russian aggression in Ukraine.
  • "Sweeping restrictions on Russia’s military to strike a blow to Putin’s military and strategic ambitions.
  • "Russia-wide restrictions to choke off Russia’s import of technological goods critical to a diversified economy and Putin’s ability to project power.
  • "Historical multilateral cooperation that serves as a force multiplier in restricting more than $50 billion in key inputs to Russia- impacting far more than that in Russia’s production."

This came a day after the U.S. imposed Nord Stream 2 sanctions in response to Russia's full invasion of Ukraine. On February 23, 2022, OFAC added to its SDN list certain individuals and the Nord Stream 2 AG entity and issued General License 4, "Authorizing the Wind Down of Transactions Involving Nord Stream 2 AG."

Earlier in the week, President Biden (i) signed Executive Order ("EO") 14065 blocking trade and most other dealings involving the so-called Donetsk People's Republic or Luhansk People's Republic regions of Ukraine, (ii) added two Russian banks and numerous related entities to its Specially Designated Nationals and Blocked Persons List, and (iii) expanded existing prohibitions on dealings in Russia's sovereign debt. EO 14065 also expanded the scope of the national emergency declared in EO 13660 of March 6, 2014 (see related coverage).

Commentary

James Treanor
James Treanor

Foretold but shocking nonetheless, Russia has begun major military action against Ukraine, apparently aimed at toppling that country’s democratically elected government.  Now we await the full details of the world’s response, in the form of “unprecedented” sanctions against Russia, to be imposed by the US, UK, EU, and other allies and partners.  Targets include, at a minimum, four additional Russian banks, as well as a host of oligarchs, cronies, and businesses.

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